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    Published on: November 13, 2006

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    KC's View:

    Published on: November 13, 2006

    Advertising Age reports that as the Democrats take over control of both the US Senate and the US House of Representatives early next year, there are numerous shifts in power that could have an immediate and/or long-term impact of food and drug marketers.

    For example, if Sen. Edward Kennedy (D-Massachusetts) becomes chairman of the Senate Health Committee, it is expected that he will focus on prescription drug advertising. Kennedy “has co sponsored legislation that would impose a two-year moratorium on advertising a drug after its approval (and) has also criticized the Food and Drug Administration for not giving direct-to-consumer drug ads sufficient scrutiny.”

    If Sen. Tim Harkin (D-Iowa) becomes chairman of the Senate Agriculture Committee, it is believed that he will put a real priority on the advertising of foods and beverages that targets children.

    Rep. John Dingell (D-Michigan), expected to be chairman of the House Energy and Commerce Committee, is likely to also focus on prescription drug advertising, and other changes in House leadership are likely to put a different spin on issues of nutrition and child-targeted advertising, as well as consumer privacy concerns.
    KC's View:
    As something of a political junkie, we’ve been reading a lot of stories and watching a lot of television news the past week or so about the new Congress, and one of the things that seems possible is that many of the Democrats elected last week are not old-style Democrats – their comments, at least, seem to be rooted in a kind of economic populism with less of a commitment to the special interests that often have held the Democratic party captive. (Which are different from but no less demanding than the special interests that often have held the Republican party captive.) We kept hearing comments from many of these newly elected officials about how they want to work on health care issues, but do so in a way that would aid – not hurt – small business owners.

    Intention, of course, is a lot easier than implementation…especially when a lot of the committee chairs will be held by old-style Democrats. But maybe, just maybe, there are changes in the wind.

    These changes are reflected in the Food Marketing Institute’s reported intention to have former Vice President – and current environmental activist – Al Gore as a featured speaker at its 2007 convention. Organizations like FMI and the National Grocers Association (NGA) often have worn their prejudices on their sleeves with their support of the Republican party, and we’ve often wondered what would happen when the pendulum swung the other way.

    Which seems to have happened.

    (The Gore invitation, by the way, has got to be more a reflection than a result, since the invitation had to be tendered long before Election Day.)

    We think it will be interesting to see how the industry reacts to the Gore appearance, since we learned first-hand here on MNB how many people out there believe that global warming is either a myth or a liberal invention designed to frighten ignorant citizens.

    Published on: November 13, 2006

    • The Los Angeles Times reports this morning on the environmentally conscious Wal-Mart that has been open in Denver for the past year, and for which a progress report is scheduled to be issued today. “Wal-Mart's sustainability efforts, unlike some of its other initiatives, also have won the company something more elusive: approval from critics and others not predisposed to Wal-Mart fandom,” the Times writes.

    Beyond the obvious environmental advantages and the economic impact they can have on the company’s bottom line, Wal-Mart also sees its efforts in terms of two different kinds of outreach. “As the company's environmentally conscious changes roll out to its other stores, Wal-Mart figures it has 130 million opportunities every week — each time a shopper walks through its doors — to encourage people to make money-saving, earth friendly choices in their own homes and lives,” the Times reports. “What's more, the findings from Colorado and a predecessor experimental store in McKinney, Texas, offer strategies for burnishing Wal-Mart's image and winning over skeptics in places such as Los Angeles.”

    • The New York Times reports that as Wal-Mart continues to look for ways to bring its brand of retailing to New York City, the borough of the Bronx has turned into the latest battleground in this ongoing struggle. “Leaders of the anti-Wal-Mart campaign have been forming alliances with Bronx community groups and politicians as well as holding town hall meetings to plan their attack and energize their ranks,” the Times writes, even though the retailer has not announced plans for the Bronx or even a possible location there.

    However, community activists aren’t taking any chances. After all, Wal-Mart tried – and failed – to get stores built in the boroughs of Queens and Staten Island, and the assumption is that the retailer doesn’t like to take “no” for an answer. And all the company says is: “Wal-Mart continues to consider its options in all five boroughs.”

    • Wal-Mart said late last week that as it attempts to preempt its competition in the days leading up to the end-of-year holidays, it is cutting prices on about 50 small home appliances. The company characterizes the strategy as a return to its value-driven roots after a flirtation with the “cheap chic” approach that is more typical of rival Target stores.

    • There are conflicting reports about Wal-Mart’s interest in Italian retailer Esselunga, with some stories saying that the company has made an $5 billion (US) offer to acquire the privately held chain, but with Esselunga chairman Bernardo Caprotti denying that any bid has been made.

    This is just the latest speculation about Esselunga’s future. Last month, Caprotti denied that he was about to make a deal with Tesco.

    Bloomberg reports that Wal-Mart de Mexico, commonly known as Walmex, is expected to get approval this week to offer financial services in each of its more than 800 stores…an approval that so far has eluded its parent company in the US.
    KC's View:

    Published on: November 13, 2006

    In the wake of the sales of its stores to Ahold and C&S Wholesale Grocers (which subsequently sold six stores to A&P’s SuperFresh), former Clemens Markets CEO Jack Clemens has published an open letter to shoppers in local Pennsylvania newspapers in which he thanks customers for their patronage and addresses some of the controversies generated by the sale.


    • “Although it is very difficult to see the Clemens’ banners removed from our markets‚ I am confident that we made the right decision to sell our stores at this point in time. Giant and SuperFresh both have excellent reputations in the food industry. They are as equally committed as Clemens in continuing to provide our customers and communities with quality products for a good value and great customer service.”

    • “Although we have had some adverse press from a select few employees and are disappointed with the erroneous rumors circulating‚ we are very pleased that we were able to secure positions for almost all of our 2‚300 store personnel.

    “Employee job security was of primary concern to our family during the complicated sale process. To date‚ fewer than 300 store employees have refused positions for one reason or another‚ but the interview process with Giant and SuperFresh will continue.

    “In a perfect world‚ we could guarantee everyone would be placed in the ultimate job of his or her choice‚ but unfortunately that is out of our control.

    “What I can say is that Giant is a class organization and it has been our pleasure to work with their staff throughout the transition process and in placing our people.”

    • “As with any business transaction‚ the transition with C&S Wholesale Grocers was not without headaches. We did experience some disappointments and setbacks. Following the sale of the eight Clemens stores to C&S Wholesale Grocers‚ they‚ in turn‚ sold six stores to A&P/SuperFresh.

    “Unfortunately for our employees‚ SuperFresh is bound by a bargaining contract. I certainly understand that it is difficult to ask for patience from our employees until such time as they learn what jobs are available. However‚ they are able to collect unemployment benefits in the interim.”

    • “Respectfully‚ I stand by my conviction that the management of Clemens Markets Inc. did everything we could to assure that the majority of our employees would not be without jobs. My sincere hope is that all former Clemens’ employees not hired by SuperFresh at the onset go back for another interview or stop by Giant for an application for employment.”
    KC's View:
    And if that doesn’t work,, they can only go down to the local Wal-Mart and fill out an application…because the Bentonville Behemoth is a lot more likely to offer continuing employment than the local SuperFresh…

    Published on: November 13, 2006

    The Wall Street Journal reports that Kraft Foods is sponsoring a special holiday issue of People magazine “that comes with an olfactory twist. Five of Kraft's 31 ads in the issue, which should arrive in subscribers' mailboxes today, allow readers to rub a spot to experience the smell of one of the products being advertised.”

    That means that when you come to ads for cream cheese, coffee, cherry Jell-O and white chocolate, for example, you’ll be able to smell those items.

    “Magazines have long offered ads that tickle consumers' nostrils, most noticeably perfume strips and ads that ask readers to ‘scratch 'n' sniff,’” the WSJ reports. “But those ads had a downside: the scent often permeated the magazine, irritating some consumers. Improvements in printing technology have lately made it easier for publishers to add scent to ads -- as well as editorial features -- with less risk of turning off readers.”
    KC's View:
    The story comes just a couple of weeks after Advertising Age reported that retailers such as Kroger, Wal-Mart, Procter & Gamble, PepsiCo and Mars are investing in so-called “scent technology” that can be used to entice customers walking through store aisles.

    The interesting thing is that when we commented on the Ad Age story, we got a lot of email from MNB users worried that people with fragrance allergies and sensitivities who might be turned off or harmed by the technology…and it strikes us that People and Kraft could run into the same problem.

    Published on: November 13, 2006

    Advertising Age reports that Starbucks is trying an innovative approach to marketing this holiday season – a viral campaign that seems to have more to do with passing on good cheer than selling coffee.

    “Starbucks is surprising Manhattan commuters with free subway MetroCards and warming Chicagoans with free movie tickets,” Ad Age writes. “The catch is Starbucks wants consumers to pass on their benevolence by performing a good deed for another person, say, to hold open a door or buy someone a cup of coffee. With each deed, the recipient is handed a ‘cheer pass,’ a numbered card that serves as a tracking device for the effort's viral component.

    “As much social experiment as buzz campaign, Starbucks is hoping the cheer-pass recipients take the individually numbered cards and log on to the coffee chain's holiday microsite,, to share how and where they received the pass. The idea is to follow how long people can sustain the ‘chain of cheer.’ Of course, the site also will promote a trio of holiday coffee blends and other gifts consumers can buy through Starbucks.”

    At the same time, the Wall Street Journal reports that Starbucks is employing a new design approach in its stores that includes embracing traditional and local touches. “Executives at Starbucks say the new design methods aren't a response to a backlash against its prevalence, and they point out the company has always strived to personalize its cafes,” the Journal writes. “Yet as the chain gets bigger, Starbucks is sharpening its rebuttal to the complaint that its stores homogenize towns,” especially as it plans to triple its store count – a strategy that can only heighten complaints about its ubiquity.
    KC's View:
    The viral marketing scheme is brilliant – even if it doesn’t work. It clearly establishes that Starbucks is taking an innovative and socially conscious approach to spreading its message, which certainly fits the company’s broader image. It also isn’t just about selling coffee; it is about cementing the notion of a Starbucks image, a Starbucks kind of person.

    Published on: November 13, 2006

    Winn-Dixie announced late last week that the U.S. Bankruptcy Court for the Middle District of Florida has accepted its reorganization plan, which should allow the chain to emerge from bankruptcy within 30 days.

    Winn-Dixie president/CEO Peter Lynch said, “We are very pleased that the court has confirmed our Plan of Reorganization and that Winn-Dixie's emergence from Chapter 11 is now just around the corner. This is an exciting time for everyone at the company. We will continue to work hard to build on the turnaround we have started and to accelerate our momentum.

    “When Winn-Dixie emerges from bankruptcy, the company will be in a stronger and more financially stable position. We will be able to increase the level of investment in our stores and pursue other initiatives to improve and add value to our business. Our focus will remain on providing outstanding service and products to our customers.”
    KC's View:
    The bankruptcy protection may end, but the real test begins as Winn-Dixie tries to prove its relevance to the modern consumer, starts to figure out how to position itself for the customer who will be its primary shopper in a few years, and departs from the notion that a company can cut its way to prosperity.

    We’ll see.

    Published on: November 13, 2006

    Advertising Age reports that PepsiCo is creating wholly new startup brands” for Whole Foods “that bear no telltale trace of their corporate lineage and are supported with very little marketing.

    “Its high-energy protein-drink line, called Fuelosophy, follows in the footsteps of its already-introduced Sun Snacks organic line of sunflower-oil chips and cheese puffs testing in the chain since last February.”

    The strategy, according to Ad Age, allows Pepsi and other like-minded manufacturers “to test new products without the heavy costs of mainstream launches and establish much-needed credibility in health and wellness.”
    KC's View:
    Companies that take this sort of diversified approach are being smart…reaching out to new consumers in new venues. We may just have to run down to the local Whole Foods and check out Fuelosophy…it sounds like it might be a healthy alternative to the energy drinks that are sweeping the marketplace.

    Published on: November 13, 2006

    The Washington Post reports that “Perrigo Co., the nation's largest maker of store-brand drugs for retailers such as CVS, Safeway and Food Lion, is recalling 11 million bottles of the painkiller acetaminophen after finding small metal particles in 200 caplets.”

    No injuries have been reported by people have ingested the caplets, and the US Food and Drug Administration (FDA) says there is little chance that anyone could suffer adverse affects from taking the recalled medicine.

    It is not yet known how the private label acetaminophen may have become contaminated.
    KC's View:

    Published on: November 13, 2006

    A new study by the University of Pennsylvania School of Medicine, published in Pediatrics, challenges the conventional wisdom saying that children who drink too much fruit juice will tend to get fat,

    Rather, the study says that the evidence suggests that only children predisposed to being overweight are at risk for gaining extra weight because of fruit juice consumption – though the study still recommends that kids between the ages of one and six drink no more than six ounces of fruit juice a day.

    The study also says that children who eat more whole fruit tend to gain less weight than those who don’t.
    KC's View:

    Published on: November 13, 2006

    The Wall Street Journal reports that contrary to previous studies, there is a new medical report from the Harvard School of public Health suggesting that “diets low in carbohydrates and higher in fat might not be bad for the heart - at least when compared with low-fat, high-carbohydrate diets that are sometimes advocated by doctors.”

    The fear has been that low-carb diets like the Atkins diet that have people consuming meats high in saturated fats could lead to an increase in incidents of heart disease.

    The new study doesn’t endorse the Atkins diet or other low-carb, high-protein approaches. In fact, it actually does the opposite – suggesting that a low carb will not generally have a long-term impact on a person’s weight because it is so hard to maintain for an extended period of time.
    KC's View:

    Published on: November 13, 2006

    Forbes reports that European Union Health Commissioner Markos Kyprianou has cited Unilever, PepsiCo, Coca-Cola, McDonald’s and Kraft Foods “for committing to voluntary steps to reverse Europe's widening girth and promote physical fitness at a time when the number of overweight children in the EU is rising by 400,000 a year.”

    According to the Forbes story, “Kyprianou said the European Commission has reaped 146 commitments from makers of soft drinks and fast food to reformulate their products by cutting sugar, fat and salt levels, make labels clearer, agree on common advertising norms and promote healthy lifestyles,” and that he says public-private partnerships are critical if the obesity problem is to be reversed.
    KC's View:
    Public-private partnerships are always better than government mandates, which always seem to create bureaucracy.

    McDonald’s, it should be noted, said last week that it would switch to a cooking oil with fewer trans fats…but would do so only in Europe.

    Published on: November 13, 2006

    The Oregonian reports on US Department of Agriculture (USDA) reassurances that unlike the last few years, there should be no shortage of turkeys. “After declines in 2004 and 2005, turkey production figures for the first three quarters of 2006 are in line with those of 2003,” the Oregonian writes.

    However, USDA also says that turkeys may cost more this year – because retailers are paying more for them and may not be as willing to offer discounts.
    KC's View:

    Published on: November 13, 2006

    • Reports in various publications say that Tesco has agreed suspend its Thailand expansion program for three months, a response to an anti-Tesco movement instigated by small retailers in the country.

    Thailand is Tesco’s largest market outside the UK.
    KC's View:

    Published on: November 13, 2006

    In this month’s edition of Facts, Figures & The Future, Phil Lempert addresses what happens when municipalities decide to ban trans fats:

    “The controversy over a city or state's right to prohibit certain ingredients or foods, is not an easy debate. There are strong willed proponents on both sides. And it appears that the trans fat ban is also opening the door for other food restrictions.

    “Last month's hearing in New York City also included a proposal that would require the restaurants in the city to list calories.

    “Now this proposal was not as hyped as the board's recommendation to prohibit trans fat - but much like it, the passage of this proposal by the city would create the nation's strictest system of calorie disclosure in restaurants…

    “This and the furor over the proposed trans fat ban will lead the discussions throughout the rest of the nation on the extent to which public policy should be used to revise people's diets. Voting on the proposal will happen in December and if passed would likely take effect July 1st.

    “Question is, how long will it take until the foods that are sold in supermarket delis, prepared foods and on our shelves be dealt the same legislation; and how will our shoppers react?”

    In another F3 story, Anne-Marie Roerink, director of research for the Food Marketing Institute (FMI), writes about the economic performance of the supermarket industry:

    “Larger companies outperformed smaller ones with net profits of 1.56 percent versus 1.16 percent. It appears that independents have not been able to maintain the sales and profit increases achieved two years ago. In fact, net profits for the group comprised of the smallest companies (annual sales of less than $25 million) actually dropped compared with last year. In addition, this group reported much lower capital expenditures and increased their short-term and long-term debt.”

    And, Roerink writes: “Every year, a small group of retailers outpace the pack with profits at two or even three times as high as the industry as a whole. These profit leaders continue to demonstrate two key factors: they have much lower debt structures and reinvest more of their profits back in the business. These are the exact opposite results than those found among the smaller-size companies. As a result, the profit leaders are increasingly made up by larger companies.”

    In yet another story, F3 writes about a new ACNielsen study saying that “eighty-two percent of Americans say they blame themselves for being overweight, rather than passing the buck to fast food chains, food manufacturers and retail food companies. To break this down further, 29 percent of consumers said that the lack of exercise is the biggest contributor to people's being obese or overweight, while 19 percent said too much junk food availability is the cause. Eighteen percent of respondents said that modern life is too convenient or easy, making it harder for people to make the effort to lose weight, while 12 percent said that people don't care about good nutrition.

    “Despite the fact that Americans sometimes are characterized as wanting to blame others for their misfortunes or the conditions in which they find themselves, respondents actually illustrated exactly the opposite trend - just one percent of those surveyed said that the lack of legal actions against the food industry was responsible for the national obesity problem, and just two percent said that a lack of educational information was a factor leading to weight gain.”

    And, there’s much more.

    To get your copy of F3, go to:

    F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.

    (Full disclosure: MNB Content Guy Kevin Coupe is a contributor to F3.)
    KC's View:

    Published on: November 13, 2006

    • Delhaize announced that it will sell its Czech business, Delvita, to German retail group Rewe for the equivalent of $127.4 million (US).
    KC's View:

    Published on: November 13, 2006

    • Wendy's International has named Kerrii Anderson as the company’s president/CEO, removing the ‘interim” in the titles that she has held since earlier this year. Anderson, who was the executive VP/CFO of the company, took on the job on an interim basis when then chairman/CEO Jack Schuessler announced his early retirement.
    KC's View:

    Published on: November 13, 2006

    • Retail drug chain Duane Reade reports that its third quarter total sales increased to $385.7 million from $378.6 million, with same-store sales up 4.4 percent. The chain’s net loss for the quarter was $19.7 million compared to a net loss of $15.7 million in the prior year period.
    KC's View:

    Published on: November 13, 2006

    We had a story last week about how Wal-Mart is trying to trademark the acronym EDLP, an industry term that stands for “Every Day Low Prices.” The retailer has filed an application with the U.S. Patent and Trademark Office that would allow it the exclusive use of “EDLP,” as well as of the term “rollback,” which it uses to denote permanent price reductions n specific items.

    One MNB user was outraged.

    In late '85 or early '86, Skaggs Alpha-Beta went to an EDLP format in central New Mexico. I know, because I worked for their supplier and generated the computer printed shelf talkers for their grand announcement.

    These talkers had, in bold letters, EDLP across the top, with the item information, the old price with a line through it and the new price with a down arrow next to it. I probably have a sample in my archives somewhere.

    For Wal-Mart to even attempt to trademark EDLP is either ludicrous, or the pinnacle of arrogance.

    MNB user Richard Lowe wrote:

    It should not even be considered as an application they are way too late! A trademark must be initiated in the beginning not as an afterthought.

    And another MNB user wrote:

    Meijer has used the Every Day Low Prices slogan in this market in the past. I would expect they would object.

    MNB user Al Neumann had some thoughts about Wal-Mart’s decision to encourage the use of “Merry Christmas” this year, compared to last year’s more generic approach to the holidays.

    I just wanted to comment on the story about Wal-Mart using the word Christmas this year instead of just plain old Happy Holidays. This issue has been unsettling to me for the past couple of years that saying, "Merry Christmas" has somehow become taboo. I understand that not all religions celebrate this holiday in the religious sense, which is all fine and good, but America has essentially taken the religious meaning out of the holiday. We have made it be a calendar holiday just like the 4th of July or Thanksgiving. Yet, no one ever complained about someone saying, "Happy 4th" or "Happy Thanksgiving."

    I personally love Christmas and have always wished people a merry Christmas. It is just good to see that at least one institution feels the same way.

    We reported last week that the Massachusetts state referendum proposing that Massachusetts supermarkets and c-stores be allowed to sell wine – an issue that generated more than $11 million in campaign spending by both sides – was rejected by 56 percent of voters on Tuesday. It was said to be the most expensive ballot campaign in state history. Opponents were primarily independent liquor store owners, who were desperate to keep supermarkets from infringing on their long-held monopoly. They argued that teenagers would be to obtain liquor more easily from supermarkets and convenience stores.

    We commented that this is “a load of nonsense. This was about protecting sales, nothing else, and the result simply reinforces the notion that a level of Puritanism is alive and well and living in New England.”

    One MNB user responded:

    As a Massachusetts resident I voted no on Question 1, and I take exception to your veering off track from the real issue to sling words like "Puritan" around - were you asleep for the election results? As an occasional wine drinker, I see a benefit but more of a downside to the sale of wine in grocery stores. Having worked for years in a grocery store - I believe that grocery stores are every bit as capable as liquor stores of checking ID's, assuring that only those who are of age buy alcohol - so no issue there. I also believe the sale of wine in grocery stores would make wine consumption less of a decision and more of a habit - but since that would be a Puritanical micro-management of other peoples alcohol consumption - I based my vote in support of small business owners whose livelihood depends on their sale of wine. Everyone moans (myself included) about Wal-Mart - and soon Tesco- annihilating almost every small business in every area they choose. What's different here?

    Another MNB user wrote:

    While it is very true that liquor store associations spent a lot of money to get this proposal defeated (to protect their sales-you are correct), it is equally true that convenience stores are easy prey for underage customers looking to acquire tobacco or beer. There are countless incidents in this state where minors have purchased tobacco and beer at convenience stores where low wage and under-trained help are easy marks.

    As the father of two pre-teenage daughters, I voted against this proposal to help keep controls in place and not increase the amount of places where minors can go to purchase.

    If the proposal was just for grocery stores, and did not include all the convenience stores (on every corner), I might think twice about the vote.

    And speaking of Puritanism, as one who grew up in Southport CT, near you, where capitalism and conservatism reign, just remember that after these elections, I am stuck in the most liberal, left-wing state in the country Puritans are only found in Sturbridge Village and Plymouth Plantation now!

    And another MNB user wrote:

    Supermarkets do sell wine and beer in Massachusetts. There is a limit of three licenses per ownership. I do not know the history of the limitations, but, it was probably to protect competition and against monopolies. For me it was about unfair business advantage. How would a three location liquor only store compete against instant giants? All retail Mom & Pop stores have had to compete against giants, but their growth wasn’t mandated to stop at three outlets. The little guys used what works best politics; scare you into thinking the worst even if the alternative is better for you. The big box stores should regroup and tried to slowly increase the number of licenses for everyone. Hey, nothing business, it’s just politics.
    KC's View:

    Published on: November 13, 2006

    In Sunday’s National Football League action…

    Baltimore 27
    Tennessee 26

    Buffalo 16
    Indianapolis 17

    Cleveland 17
    Atlanta 13

    Green Bay 23
    Minnesota 17

    Houston 13
    Jacksonville 10

    Kansas City 10
    Miami 13

    NY Jets 17
    New England 14

    San Diego 49
    Cincinnati 41

    San Francisco 19
    Detroit 13

    Washington 3
    Philadelphia 27

    Denver 17
    Oakland 13

    New Orleans 31
    Pittsburgh 38

    Dallas 27
    Arizona 10

    St. Louis 22
    Seattle 24

    Chicago 38
    NY Giants 20
    KC's View: